International Trade: 2020 Post-Election Analysis Issue by Issue
The Trump administration’s approach to international trade was one of the most significant shifts away from the policies of previous administrations. Trump’s “America first” policy resulted in a reliance on the use of tariffs and therefore trade tensions with just about every U.S. trading partner to protect certain favored industries and political constituencies, such as steel producers. It is important to remember that although Biden campaigned as a complete rejection of President Trump, his views on trade policy have always been shaped by populist and nationalist principles, which were embraced by the Trump administration. Additionally, Biden has positioned himself as a stronger candidate against China than President Trump.
During the campaign, Biden was very cautious in the way that he spoke about trade policy. He criticized Trump’s trade policy as ineffective, but did not make any commitments to undoing the wide range of tariffs enacted by the Trump administration. Biden has hinted that his approach to trade will focus on continuing to confront China, but shift away from the unilateralism of the Trump administration and return to a more multilateral approach as a way to confront the Chinese government’s trade policies.
The most detailed explanation that the Biden Campaign provided on his views of tariff policy can be found in his lengthy response to questions submitted by the United Steelworkers Union (USW) in May 2020. As Biden explains to the USW:
“Trade is tough competition for jobs and markets. The President needs to stand with American workers and communities, not with wealthy corporations or the foreign governments that are subsidizing and protecting their businesses. That’s the problem with Trump. When push comes to shove, Trump sides with corporate interests against workers, their unions, and their communities. And he rewards corporations and their executives for abandoning American workers and moving jobs overseas -- rather than holding them accountable to create, maintain, and bring back jobs to the U.S.”
Biden’s campaign conveyed some nationalist and populist similarities with Trump; however there will likely be a different approach on a range of policies. As stated, Biden will seek to repair and restore relations with our allies, particularly our EU, NATO and USMCA allies. The trade fights generated by the Trump administration with these allies, including the Section 232 steel and aluminum tariffs and the Boeing-Airbus dispute with the EU, has created numerous problems for U.S. manufacturers because of retaliatory tariffs and disruptions in U.S. supply chains. Disruptions of these supply chains caused by tariffs rattled the U.S. business community and were among the most unpopular trade actions by the Trump administration.
While trade policy in a Biden presidency will look more like pre-Trump U.S. trade policy, it is unlikely to result immediately in new bilateral or multilateral trade agreements, as the Biden trade team will spend a significant amount of time “putting out fires” inherited by the breakdown in trade relations under the previous administration.
As stated, the first tariffs that are likely to be terminated are the Section 232 tariffs on steel and aluminum on certain countries. Look for Biden to lift tariffs on allies from the EU and NATO, Canada and Mexico, Japan, South Korea, Australia and New Zealand. Biden could explain the lifting of these tariffs by stressing the need to bring these countries into a global alliance to confront China on a variety of its trade policies, including its overcapacity in steel production.
In summary, trade policy politics have never cut cleanly along partisan lines, and current public skepticism about past free trade agreements, fostered by candidates from both political parties, means that new comprehensive trade agreements requiring Congressional action are unlikely for the foreseeable future, no matter which party ends up controlling the Senate. Like past administrations, a Biden administration will likely use Congressional inaction on trade and the statutory tools at its disposal to try to negotiate smaller trade agreements, while also using more subtle approaches to place barriers on imports to protect domestic industries, including strengthening “Buy American” provisions in government contracts and tilting anti-dumping and countervailing duty laws even further in favor of U.S. petitioners.
While Biden has largely refrained from issuing any detailed proposals on trade policy, over the next four years we can expect to see an emphasis on U.S. domestic growth and a commitment to working with allied nations to confront China.